Brendan Smith (Cavan-Monaghan, Fianna Fail)
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364. To ask the Minister for Foreign Affairs and Trade the impact of sanctions against Russia on trade to and from Ireland; his position on the issue of sanctions; if he foresees the lifting of sanctions before the end of 2015; and if he will make a statement on the matter. [35787/15]

Charles Flanagan (Laois-Offaly, Fine Gael)
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In July and September 2014, the EU agreed a package of restrictive measures against the Russian Federation in relation to access to capital markets, trade in arms, dual use goods and access to sensitive technologies, particularly in the field of energy. In June, the Foreign Affairs Council extended the duration of the economic sanctions until 31 January 2016.In response to Western sanctions, President Putin signed an order in August 2014 banning the import of a range of food and agricultural products from the EU, Norway, Australia, Canada and US. The Presidential ban was initially fixed for one year. However, in June it was extended for a further year to August 2016. In 2014, the value of Ireland’s bilateral trade with Russia stood at €948 million, comprising exports of €722 million and imports of €226 million. This was an increase of €169 million on the previous year. However, the figure for exports in 2014 included a once-off order for fertilizer products valued at over €150 million and this had the effect of distorting the overall exports performance for the year.

In the first seven months of 2015, bilateral trade with Russia has fallen significantly. Between January and July, the value of exports to Russia reduced from €508 million to €217 million compared to the same period last year. This represents a drop of 57%. At the same time, imports from Russia fell from €155 million to €119 million, a drop of 23% on the corresponding period in 2014.

There are a number of reasons for the sharp drop in bilateral trade with Russia in the year to date. EU sanctions and, in particular, Russian retaliatory measures are clearly having a negative impact on trade flows. However, this does not capture the full picture as there are a number of other factors which have contributed in no small way to the current reduction in trade. These include the dramatic decline in the value of the rouble, the fall in oil prices, the economic downturn in Russia, negative investor sentiment towards the Russian market and a ban on pork products from the EU following an outbreak of African Swine Fever in a number of EU states in Eastern Europe. The decline in the value of the rouble is particularly striking, resulting in the cost of imports to Russia almost doubling in the past year.

Despite the challenging environment, the Embassy in Moscow, together with the state agencies, remains focused on raising awareness of Ireland as an attractive investment location and continues to support Irish companies present in Russia and those seeking to explore new market opportunities there.

The EU sanctions were imposed on Russia in response to its aggressive actions in Ukraine and with the clear aim of encouraging a change in its behaviour towards its neighbour. They are clearly having an effect on Russia’s economy and they remain a key element of the EU’s approach to the conflict in Ukraine. The measures can be strengthened or eased in light of developments on the ground and progress made towards the objectives set by the EU when they were put in place.

I am strongly of the view that the restrictive measures against Russia, coupled with open dialogue and continued political and diplomatic engagement with the various sides involved in the conflict, offer the best way of creating the conditions for a peaceful resolution of the crisis.